Marc Andreessen predicts the end of retail; expansion plans at Starbucks, Intuit; and Newegg takes down a patent troll.

Here are a few stories that caught my attention in the commerce space this week.

Death bells toll for brick-and-mortar retail

A recent report from mobile analytics startup Flurry looked at the growth in consumer use of shopping apps and concluded the “App & Mortar economy has arrived.” Flurry president and CEO Simon Khalaf reviewed their research results in a blog post on the company website, noting that “consumer time spent in Retailer Apps has skyrocketed by 525% from December 2011 to December 2012,” exceeding the shopping app growth of 274% as well as overall app growth of 132%.

Khalaf points out that it’s “mission critical” for retailers to start extending their reach to consumers beyond the brick-and-mortar walls and into connected devices such as smartphones and tablets. “In the App & Mortar economy, the battle for deeper consumer relationships is beginning,” he writes, “and there are already thousands of apps for that.”

Here are a few stories that caught my attention in the commerce space this week.

New trend in retail customer tracking: Smartphone Wi-Fi

Dan Tynan posted a two-part series (here and here) on IT World this week looking at growing trend of retail Wi-Fi tracking — retailers keeping track of you via your smartphone as you shop, much like online retailers keep track of your movements across the Internet. Tynan explains how they’ll do it:

“When you come within range of a properly configured Wi-Fi access point, it can record the wireless MAC address of your phone — a unique 12-digit number. Every time you pass by, that AP can log that number. … Think of it as Google Analytics for people; instead of measuring Web traffic, they’re measuring foot traffic.”

Tynan takes a look at Euclid Analytics’ software, which works with tracking device systems to help stores gather data on customers, from which aisles they spend time in to how many times they’ve visited the store to which locations they frequent. “[T]hey can even track people who walk by the store every day but never go in,” Tynan writes, “or [know] if more people enter after a window display is changed.” He notes that Euclid gathers data anonymously and in aggregate, storing the MAC address “in a one-way hash, so nobody can go backwards and figure out your actual MAC address,” but that the minute a shopper swipes a credit card, all anonymity is lost, at least as far as connecting a particular phone to a particular purchase.

Once an identity is linked to a MAC address, “all kinds of fun things can happen,” Tynan reports — retailers could text you as you walk by their stores in the mall and offer discounts or coupons to lure you inside, connect your in-store data to your online data for even deeper analysis, or even sell your data to someone else. He explores some of the privacy concerns and scenarios in his first piece and talks with Euclid Analytics director of marketing John Fu for some context in his second piece. Fu says their technology is — purposefully — not as Big Brother as it sounds:

“There are some powerful and potentially scary things you could do with this data if you wanted to, but I want to clarify that we are not doing any of those things. We anticipated these scenarios and came up with ways to prevent them from happening.”

In addition to creating a one-way hash for a customer’s MAC address, Euclid requires retailers to contractually agree “to not combine the behavioral data they collect with information they have about an individual’s identity,” and the company also “salts its data with a ‘statistically insignificant’ number of fictional customers” to further prevent customer identification, Tynan reports. He takes an in-depth look at some real world examples of Euclid’s use in retail locations and their efforts to protect consumer privacy, but also notes that “Euclid is only one of a half dozen companies using different techniques to help retailers track shoppers, most of which don’t bother to tell you.” You can read his complete report at IT World — part one, part two.

New PayPal partners, mobile wallet disruption may hinge on Apple, and prioritizing mobile in a "lukewarm" market.

Here are a few stories that caught my attention in the commerce space this week.

PayPal expands its footprint with new partners

PayPal announced this week it has expanded its U.S. footprint to include 23 new partners for its PayPal in-store payments service, in addition to the 15 national partners announced last May, making its service available in 18,000 physical store locations across the country.

According to a post on the PayPal blog, new retail partners include Barnes & Noble, Office Depot, Foot Locker and Jamba Juice, and “two additional partners that [they] will share publicly soon.”

The deal PayPal struck with Jamba Juice goes beyond the in-store payments service that allows customers to pay with their phone number and a pin, or by using their PayPal payment card. Chloe Albanesius reports at PCMag that PayPal is testing its PayPal App in one Jamba Juice location to allow customers to place and pay for their orders, so when they arrive at the location, they just have to pick up their smoothie.

Global product VP Hill Ferguson notes in a post at the PayPal blog, that the feature is available only for iPhone users at this point and that there are plans to expand to more Jamba Juice locations this year.

In addition to its announcement of new retail partners, PayPal also announced a new hardware partner. Sarah Perez reports at TechCrunch that PayPal is “also partnering with point-of-sale and hardware maker NCR to expand into restaurants, as well as into other businesses, including gas stations and convenience stores.”

Here are a few stories that caught my attention in the commerce space this week.

NFC-enabled Cashwrap case equips iPhone with Isis

At the 2013 International CES this week, Incipio and AT&T announced the launch of Cashwrap, an NFC-enabled iPhone case that equips iPhones with the Isis Wallet, currently only available for NFC-compatible Android phones. According to a post at 9to5Mac, the case will be available in March and will cost $59.99 to $69.99.

9to5Mac shot a short video of the product from the CES show floor (the Cashwrap representative mistakenly indicates the case will support iPhone 5 — at launch, it will support iPhone 4 and 4S):

When Isis launched in October, some questioned the viability of the payment platform and whether or not it was addressing a real problem. In a report at Consumer Reports, Jeff Blyskal concluded: “Isis, like Google Wallet, still seems to require a lot of work and needless complexity for the questionable convenience of paying by cell phone.” Now, on top of the complexity and questionable convenience of NFC payment, iPhone users must not only attach an appendage to the phone, but fork over a not-so-insignificant amount of cash — all for a payment platform that’s only available in Salt Lake City and Austin, and only at select retailers.

At Telecoms.com, Elliott Holley covered a recent report by financial research firm Celent that says the issues NFC payment technology has faced thus far are only going to be compounded in 2013 and that NFC payment solutions will be overshadowed — perhaps ultimately replaced — by cloud-based wallets. Celent senior analyst and author of the report Zilvanas Bareisis told Holley that not only is using the technology still much more difficult than swiping a credit card, but in markets such as the U.S., “the infrastructure bill is huge and convincing retailers and merchants is difficult.”

Holley highlights a key insight from the Celent report:

“Part of the problem for NFC digital wallets is that while the physical POS world is dominated by cards and the mobile equivalent is to have payment credentials inside the phone and sent to the POS via NFC, the online world is dominated by cloud-based wallets such as PayPal. That makes it difficult to bridge the online-offline convergence of customers who use their mobiles while shopping to read product reviews, compare prices and order online, or pick up an item from a local store, according to Celent.”

There’s also renewed rumors of Apple’s intention to integrate NFC technology into the next iPhone. Mikey Campbell reports at Apple Insider that on December 20, 2012, the US Patent and Trademark Office published a patent application filed by Apple in 2011 “for an ‘Integrated coupon storage, discovery, and redemption system,’ a property covering the receipt, storage and use of digital coupons on mobile device” — basically, what Passbook became this past year. Campbell notes that NFC capabilities also are mentioned in connection with coupon redemption, indicating “that the company is at least thinking about including the protocol in future versions of the iPhone or iPod Touch.”

Joann Pan at Mashable notes the implications such integrated technology could have on retail shopping for consumers and merchants alike. She writes:

“With Apple’s proposed ‘integrated coupon storage,’ patrons will be able to walk into stores and receive notifications about items for which they have coupons. After the transaction is complete, the customer will receive a digital receipt wirelessly. Alerts will also be pushed for coupons with impending expiration dates. The patent also mentions a verification system for coupons and discounts.”

Industry executives predict commerce trends, mobile shoppers are Apple users, and the genius of the barcode.

Here are a few stories that caught my attention in the commerce space this week.

Predicting the 2013 commerce space

As 2012 wraps up, industry executives are looking ahead to what 2013 might bring. In a report at eCommerceBytes, executives at e-commerce and Internet service company Rakuten pulled together five trends to watch in 2013, including increased use of video on e-commerce sites; a market shift toward specialized retailers, both brick-and-mortar and online; and the advent of curated commerce, or “shopping for a lifestyle” as opposed to shopping for individual items.

Executives also highlighted mobile integrations, noting that they expect an increase in in-store integration via apps, QR codes and augmented reality. Predicted trends also included a change in the way consumers pay: “Services like PayPal and Apple’s iTunes have already begun to centralize payments on mobile, but the next step will be services such as Square that offer sellers the ability to receive card payments with their existing smartphone and a simple plug-in device,” the report says.

PayPal president David Marcus also took a look ahead. He sees cash registers going mobile, with customers able to pay from the store aisle or even the changing room, and predicts location-aware and context-relevent shopping and payments will be more disruptive than many now expect. In the payment space, he sees mobile wallets, consumer loyalty programs and coupon platforms merging into one efficient and convenient business. He also predicts NFC will die a slow death in 2013: “it’s not solving a real consumer problem,” he writes at the PayPal blog, “and it’s not providing additional value to encourage me (or anyone else, for that matter) to change my behavior.”

In related news, Square COO Keith Rabois pulled together some predictions for what consumers and retailers can expect from Square in 2013. In an interview with CNET’s Daniel Terdiman, Rabois said Starbucks’ customers haven’t seen anything yet, that they can “expect full Square Wallet functionality” in 2013 as well as new features and “major enhancements” — Rabois said Square’s partnership with Starbucks is in its “first inning.”

Rabois noted, however, that Square is just the beginning, that “anything new that’s developed in the coming months will also be rolled out for use at every single merchant that’s part of the Square Wallet program” and that additional retail partnership announcements can be expected in the coming year. Looking further ahead? “Rabois said that the company envisions Square Wallet working ‘everywhere,'” Terdiman reports, “from personal trainers to interactions between friends to contractors working people’s homes.”

Once a gift card is purchased, it is sent to a recipient’s email inbox. From there, the gift card can be redeemed in a number of ways: for Square users, the card will automatically appear in their Square Wallet; iO6 users can save the card to their Passbook; and for those who don’t use either Square or Passbook, a QR code can be printed out for a merchant to scan.

Given its recent partnership with Starbucks that catapulted Square into the mobile payment mainstream and its international expansion into Canada, gift cards might seem a bit of a departure from the platform’s mobile payment focus. Square CEO Jack Dorsey explained the move in an interview with The Wall Street Journal’s Matthew Lynley. Not only is Square aiming to make the gift card experience cheaper for merchants — Dorsey explained that traditional gift cards can cost merchants 10% to 15% to issue, where Square will charge only the 2.75% they do for credit cards — but it’s also using the cards as a discovery tool and to streamline the experience for consumers. Dorsey said to Lynley:

“The biggest problem merchants have is being remembered and being discovered, so it’s another tool for discovery. If I really like a place and I’m a good friend of yours, I can tell you, but if I give you a gift card, you’re really going to try it out. … It also starts getting into a concept of more remote commerce. People from their couch can send these experiences, can send these gifts, and they don’t need to pick out different things.”

The same-day delivery battle, NFC in vending machines, and Google as information central for holiday shoppers.

Here are a few stories that caught my attention in the commerce space this week.

The high price of instant gratification

The Wall Street Journal’s Greg Bensinger took a look this week at the e-commerce same-day delivery trend, a service eBay, Wal-Mart and Google have been experimenting with in order to better compete with Amazon, which has offered same-day service in select locations since 2009.

The obvious benefit for e-commerce retailers is being able to improve the customer experience — providing the convenience of online shopping with the instant gratification of brick-and-mortar shopping. The biggest obstacle is cost. EBay, for example, has hired couriers, paying $12.50 per hour and 55 cents per mile, Bensinger reports, but only charges $5 to deliver a minimum $25 order. Industry analyst Kerry Rice told Bensinger, “Retailers are clearly subsidizing this service to improve the customer experience. Amazon created this monster and everyone has had to jump on board to compete.”

Amazon operating at a loss to draw consumers into its ecosystem is pretty par for its business model, and its deep pockets mean companies are going to have to get creative to successfully compete. Wal-Mart is perhaps in the best position not only to compete with Amazon on this front, but perhaps even overtake and lead the same-day delivery field. Walmart.com chief executive Joel Anderson highlighted for Bensinger Wal-Mart’s advantage: “We have 4,000 Wal-Mart stores and local goods within five miles of most customers.” Each store basically serves as an online distribution center, a scale that Amazon could be challenged to meet, even taking into account its aggressive distribution center expansion plans.

In related news, Google reportedly shelled out more than $17 million to buy Canadian locker storage startup BufferBox this week. As many outlets reported, Google may be positioning itself to compete against Amazon’s Locker delivery service, which allows customers to have goods delivered to secure pick-up stations rather than home addresses.

Holiday online and mobile spending, paying with your fingerprint, and creepy mannequins are watching you shop.

Here are a few stories that caught my attention in the commerce space this week.

Holiday weekend sees huge increases in online and mobile spending

The big news this week is the cyber spending that happened over the holiday weekend. Starting with Thanksgiving Day, online shoppers found time between football downs, turkey, stuffing, and pie to spend $633 million at online retailers, according to Internet analytics company comScore — a 32% increase over 2011. Black Friday, too, saw a sizeable increase in cyber shopping with $1.042 billion in online sales — 26% over 2011 and the heaviest online spending day for 2012, at that point. Cyber Monday stole the show, though, with consumer online spending ringing in at $1.46 billion, making it the biggest online spending day in U.S. history, according to comScore.

More holiday spending than ever occurred via mobile devices as well. Sarah Perez reports at TechCrunch that a report from mobile commerce startup Branding Brand showed a 221% increase year-over-year in smartphone spending (not including sales via tablets) on Thanksgiving and a year-over-year increase of 128% on Black Friday. According to IBM’s Holiday Benchmark data, mobile purchases as a whole exceeded 16% on Black Friday, up from 9.8% in 2011. And according to IBM’s Cyber Monday Report (PDF), more than 18% of consumers visited retail sites via mobile devices on Cyber Monday, a more than 70% increase over 2011, and mobile sales approached 13% — a year-over-year increase of more than 96%. Of these mobile shoppers, 58.1% used smartphones, compared to 41.9% who shopped via tablet, according to the report.

Luke Wroblewski has additional holiday mobile shopping highlights from Thanksgiving Day and Black Friday in his Data Monday blog. A few tidbits include:

PayPal saw a 164% increase in the number of its mobile global customers on Thanksgiving Day — 2.5 times the mobile payment volume it booked on Thanksgiving Day 2011.

Mobile traffic on Black Friday has grown from less than 1% in 2009 to 24% in 2012.

Black Friday online shopping via mobile devices was led by the iPad at 10%, the iPhone at 8.7%, and Android devices at 5.5%

Here are a few stories that caught my attention in the commerce space this week.

Square aims high, BofA enters mobile payment arena

Square’s partnership with Starbucks launched this month, catapulting the payment startup into a new tier of competition. Gerry Shih at Reuters writes that Square now is looking at processing $10 billion in payments per year and “has attracted a furious response from established or deep-pocketed rivals who are determined to crush the San Francisco-based upstart.” Rivals include PayPal, Groupon and Intuit, among many others.

Shih says Square needs to prove it can compete on this new level, moving beyond food trucks and taxis and into large retailers and big-box chains.

Square’s COO Keith Rabois told Shih that Square eventually plans to process payments for every business in the U.S. and argues that though it won’t happen today, the company is in a good position to make that a reality. Shih reports:

“Because Square acts like an aggregator for its thousands of merchants, Rabois added, Square will be able to negotiate better rates with banks and credit card companies and improve its margins. Square’s daily transaction volume already makes it the equivalent of the 20th largest retailer in the United States, larger than, say, Trader Joe’s or the Gap.”

Square’s competition heated up yet again this week as well, as Bank of America launched Mobile Pay on Demand, which will allow merchants to process payments on iPhones, iPads or Android devices. Tricia Duryee reports at All Things Digital that BofA’s service fees will run 2.7% per transaction (compared to Square’s 2.75%) and that the service will launch at the beginning of December.

In what may be a sign that competition in this space is only going to increase, Trevor Rubel, EVP of strategy and emerging products for Bank of America Merchant Services, told Duryee, “I hate to come out with a commodity product, but every bank should have one.”

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